Gordon Brown: I would have thought that the best way of looking at this is that we provide choices for people in the economy. By providing such choices, some can do part-time jobs while others can do full-time jobs. If the hon. Gentleman wishes to support that, I hope that he will support the tax credit system, which enables single parents, especially, to go into work by taking part-time jobs. That is one of the reasons why the percentage of single parents in employment has risen from 43 per cent. to 55 per cent. under a Labour Government.
	If the hon. Gentleman is in any doubt about the Labour Government's success on increasing jobs, let me read to him the mid-term report of a Conservative policy group:
	"For the last five years interest rates have been at low levels and credit therefore has been cheap. For the past ten years inflation has been low, the stop-go cycle has given way to continued economic growth and there has been full employment."
	It is not us saying that, but the Conservative party.

Gordon Brown: We have done more over the past few years to help young people and entrepreneurs, in particular, to find the chance of being able to start their own business, whether that is in Wales, through the efforts of the Welsh Assembly, or throughout the whole of the United Kingdom. When we came to power, the rate of business creation was half of that in the United States of America. The rate of business creation, particularly among young people, is rising, we are giving more incentives, and the venture capital industry is developing for people who want to move on from simply starting a business to getting new capital, and we will continue to do more in the future. The record in Wales, of course, is one of more jobs since 1997, and we will continue that record in the years to come.

Gordon Brown: I am grateful to my right hon. Friend, who has taken a long-standing interest in these issues and who, like me, recently visited India. He has seen that there is a long way to go in India, with 10 million children still not in school. There is also a long way to go, even as that country develops its wealth, to solve the health problems that my right hon. Friend mentioned. We will continue to support the Global Fund to Fight AIDS, Tuberculosis and Malaria, which is not simply for HIV/AIDS, but for tuberculosis and other diseases. We will support all the necessary research to provide a preventative cure for malaria and other diseases where new inventions and innovations are needed, and we will continue to build the capacity of health care systems in the poorest countries in the world and work with those countries to do so. I see emerging partnerships between trusts and foundations such as the Gates Foundation and private sector companies, as well as Governments, in doing exactly that. I hope that we will gain all-party support when we do so.

Bill Olner: The whole industry will welcome what the Minister has just said. There was grave concern— [Laughter]—pardon the pun. There was much concern within the industry that VAT would be levied at 17.5 per cent., so I am grateful for the Minister's response. Will he continue his dialogue with the National Association of Funeral Directors, so that these services, which are very serious for many of us at a time of loss, are continued?

Stephen Timms: I certainly do not agree with that figure. As my hon. Friend the Economic Secretary said earlier, pension fund assets have risen. They actually rose immediately after that announcement. I suggest that the hon. Gentleman look at the assessment made last year by the Pensions Policy Institute, which came up with a figure great deal lower than the one usually cited by the Conservatives.

Theresa May: Thank you, Mr. Speaker. I was going to ask for a debate next week on boom and bust in the national health service, given the figures released today showing that one in six hospital trusts has mixed-sex wards. Moreover, cancer survival rates in this country are the worst in Europe, and there are 10,000 fewer nurses and health visitors than last year. A debate on boom and bust in the health service would give us an opportunity to set out the Government's failure in all those respects.
	All these issues show that, whatever the Chancellor spins about providing a new start, he has been the No.2 in this Government for ten years. Spin, crises in sentencing policy, boom and bust in the NHS—it is not just the Prime Minister's record, but the Chancellor's, too.

Jack Straw: [Interruption.] I am sorry, Mr. Speaker—I missed the fact that the right hon. Lady had finished; I do apologise. I was waiting for the finale.
	As the right hon. Lady knows, I spent 18 years in opposition and I am looking forward to her spending —[Interruption.] I therefore have avuncular, comradely advice for the Opposition. They should not believe their own propaganda when it comes to local election results. We had a difficult day last Thursday and Friday—that is obvious—and the Conservative party had a slightly better day. In my Blackburn constituency, however, the popular vote was up and we gained a seat.  [ Interruption. ] The hon. Member for Somerton and Frome (Mr. Heath) can speak for himself about what happened in his constituency. If I were a hard-headed Conservative business manager looking at the next election, I would not regard the recent results as anything like the breakthrough that the Conservatives needed. They certainly did not parallel the situation that we achieved in 1995—or, indeed, in 1990, when, sadly, we went on to lose the following election.
	On the right hon. Lady's question about the expenditure of £500 million on clinical negligence claims. All of us regret the fact that such large sums are paid out in respect of clinical negligence, but I would be interested to know whether she will make proposals to cut that sum in her manifesto at the next election. Sums paid out for clinical negligence have been rising because of an increase in patients' rights and a greater readiness by courts to award high amounts of damages. If she is saying that in future patients will not have those rights or that the sums paid out —[ Interruption. ] The right hon. Lady is wittering on about honesty in Government, but I do not understand what point she is trying to make.
	On the ID cards report, I was asked about it two weeks ago as it was slightly overdue. As ever, I took the issue up and we announced it today on the Order Paper. The right hon. Lady witters on about this, but one of the many differences between this Government and the Government whom she supported is that we have greatly increased the accountability of Ministers in large ways and small. One of the things that I had introduced was proper notice for written ministerial statements. One used to have to find planted parliamentary questions buried in the Order Paper, which were sometimes not there at all—

Jack Straw: My deputy tells me that she was never a formal adviser. All of us have constituents who have suffered from the collapse of private pension schemes, but I have personally looked closely at the evidence behind their collapse and there is much independence evidence—I am happy to provide the hon. Gentleman with details—that suggests that the impact of the abolition of advance corporation tax on the later collapse of the schemes was remarkably small. Their collapse was principally to do with other reasons.

Nicholas Winterton: May I ask the Leader of the House a serious question? Mention has already been made of the freedom of information legislation. Is not it wholly unacceptable that private and confidential correspondence between a Member and a Minister does not remain private and confidential? It should not be released into the public domain. Departments are releasing correspondence from Members, on what they say are legitimate requests, so will the Leader of the House give instructions to all Departments that Members' correspondence with Ministers is private and, if necessary, will he come to the House and make a statement on the matter? I believe that trust and confidentiality between Members and Ministers is at risk unless action is taken immediately.

Tom Clarke: My right hon. Friend will be aware that next Tuesday the Department for International Development, on behalf of the Government, will publish the first ever report to Parliament to arise from the International Development (Reporting and Transparency) Act 2006. Given that, on Third Reading, when the Act was carried unanimously by the House, there was an overwhelming view that the report should lead to a debate on the Floor of the House, is he in a position to assure us that that important debate will take place? The report cover issues such as the achievement of the 0.7 per cent. gross domestic product target, the millennium development goals, aid effectiveness, and, above all, transparency itself.

Jack Straw: My right hon. Friend the Secretary of State for Trade and Industry is not remotely indifferent to Members' concerns. It was he who secured hundreds of millions of pounds by way of additional subsidy to ensure that post offices, including in rural areas, can continue to operate. But none of us is able to resist the changes, not necessarily in our habits, but in the habits of our constituents, and the advance of technology. Of course I understand my hon. Friend's concerns and I will ensure that they are relayed to my right hon. Friend the Secretary of State. We will also look for an opportunity to debate the matter.

Mark Lancaster: May we have a debate on houses in multiple occupancy or HIMOs? Their impact on constituencies such as mine is considerable. The problem seems to be that dwellings that were built with just two or three bedrooms are being converted to have six or seven bedrooms, with a major impact on parking, antisocial behaviour, noise and nuisance. Local authorities seem powerless to do much about it.

Jack Straw: As I said earlier, I am extremely grateful to you, Mr. Speaker, for giving me and many right hon. and hon. Members on both sides of the House the opportunity to express our condolences to Lady Weatherill and to pay tribute to the memory of Jack Weatherill, as so many of us knew him.
	The most important and fundamental role of the House is to hold the Executive to account. The Speaker, above all, is here to protect and enhance the duty of all Members to fulfil that important role and to defend the rights and privileges of individual Members representing their constituents. From the moment that Jack Weatherill took the Speaker's Chair in 1983, he never forgot the duties of the House or the importance of his position in sustaining the democratic process.
	Many of the tributes to and obituaries of Jack Weatherill have highlighted his kindness. He was indeed a kind man, as you and I, Mr. Speaker—we came into the House just four years before he assumed the august office of Speaker—have good reason to remember. Other obituaries have highlighted his professionalism and quick wit. Both were absolutely the case. He was always on top of procedure and Standing Orders—and sometimes, when necessary, individual Members. Many of us who were around at the time will remember receiving the sharp end of his tongue.
	Of all Jack Weatherill's qualities, the one that I wish to emphasise is his courage. In the early and mid-1980s, politics in this country was raw and the divisions between the political parties were bitter. Without television, as all of us who were here at the time will recall, this place could be like a bear pit. The external divisions of British politics ran very deep inside the House. Jack Weatherill had to control the House. He also had to resist the ire of Ministers—I am not making a party point because you also know, Mr. Speaker, that that is a function of all good Speakers—to ensure that the fundamental role of holding the Government to account could be fulfilled and so that Members on both sides of the House could give vent to their anger.
	Jack Weatherill was a traditionalist. He was the last Speaker to wear the full-bottomed wig and while he sometimes used to complain about it, he continued with the tradition. However, he was also very alive to the need to modernise this place. He embraced the idea of television and was the Speaker in the Chair when television was first introduced. Through that, he became the first Speaker to become not just a national but an international figure. He thus enhanced the reputation of the House throughout the world. Although the notices that we receive for our performances in the House probably mark us down compared with our predecessors, the House is still regarded as one of the most vibrant democratic Chambers in the world. For that, we owe a huge debt of gratitude to the pioneering work of Jack Weatherill, who ensured that the introduction of television meant that Members were better behaved and properly reflected the dignity of the House.
	There is much else that I could say about Jack Weatherill, such as his contribution to his party in which he had a distinguished career before he took the Speaker's Chair. In the other place, after he left the Chair, he pursued many great and small causes. I will mention just one such cause, which goes back to what I said about his courage. He had a profound commitment to the sub-continent of India. He had great affection for the place and he was ready to speak up for constituents and those who had made this place their home at a time when doing so was far less popular that it is today.
	We send our condolences to Lady Weatherill and her family. We salute a great Speaker and mourn his loss.

Gwyneth Dunwoody: The office of Speaker of the House is never easy to fulfil, and over the centuries people have interpreted the role in entirely different ways. The tributes to Jack Weatherill have rather hidden one aspect of him that was of enormous importance, and that was his intelligence. He was an enormously warm and witty man and he was fun to know. When he left us for the House of Lords, he took with him his strong commitment to the essential qualities of a Parliament, which include the need always to represent the views of the whole community. Sometimes we underestimate the strains and the pressures that we put on the Speaker.
	I was honoured and delighted to know Jack Weatherill and to have the chance to work with him, not least because he interpreted the multicultural and multi-political views of our society in a very civilised way. His civility was very important. He was so cultured and so interested in everything that we did; he was a delight. He took enormous pleasure in his family—in his marvellous wife, who made it possible for him to be such a good Speaker, and in his grandchildren and children. I remember him talking, in his last Christmas in the Commons, of the debate that the family had had about whether they should remain in the palace for that Christmas holiday. His final decision was that it had been such a pleasure and a delight to be Speaker that he wanted the opportunity to have the family with him in the palace in his last Christmas in office.
	What Jack Weatherill did in the other place was representative of him. He took on the role of keeping the independent Members of the House of Lords involved in the work of the House and able to express their views. To me that was a demonstration of the man. He was a remarkable man; occasionally he masqueraded as a very ordinary man, although only idiots would have been taken in. His role in both Houses of Parliament, and among the population as a whole, was to do that very British thing of moving us forward while appearing to remain stationary, and only Jack could have done it. He will be very much missed, and I have the greatest admiration for what Jack Weatherill accomplished.

Nicholas Winterton: I am delighted to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) in what she has said. To me, Jack Weatherill was, above all, a friend. Mr. Speaker, as you said in your tribute earlier this week, he was an excellent Speaker. He got to the Speaker's Chair not because he was the chosen representative of his party but because he was the person chosen by the House. I think that that indicates just how favourably Members from all parts of the House regarded Jack Weatherill. He was, as many of us know, deputy Chief Whip. He was, as you were, too, Sir, the Chairman of Ways and Means before achieving the highest office available to the House—that of Speaker.
	Jack Weatherill was primarily a friend. He invited me to become a member of the Chairmen's Panel—a job that I have done ever since 1986, and which is a huge privilege as it enables people to serve the House and the institution of Parliament. He was a very personable man. I remember speaking in a debate on textiles. He was in the Chair, and during the debate, he arranged for a note to be passed to me. It just said:
	"Nicholas, well spoken. You spoke from the heart and I agreed with you. I am pleased I was in the Chair when you spoke."
	I think that that shows the personable nature of his relationship with Members from all parties in the House of Commons. He shared another common interest with me. He was very senior to me, and served for longer, but we were both members of a cavalry regiment. He greatly enjoyed his time in the Army, particularly, as has already been mentioned, his period in the Indian army. It is not wrong to say that he was indeed in every way an officer and a gentleman.
	When Lord Weatherill left the House, he did me a great favour. He was involved with three City livery companies. I invited him to be my guest of honour at a major livery dinner of the Worshipful Company of Weavers of which, between 1997 and 1998, I was upper bailiff. He attended that occasion, and it indicates Jack Weatherill's loyalty to those organisations with which he was involved. He was a man who was greatly liked. As the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said, he had a wonderful wife, Lyn. She was a wonderful tennis player, and I remember many games on the tennis courts of Westminster school in Vincent square. Jack himself did not come and play, but Lyn was a wonderful tennis player and a huge supporter of Jack during his time as Speaker.
	I hope, Sir, that I am permitted to say that Jack Weatherill was hugely kind to my wife, our elder boy and myself. The reception after the christening of our first grandchild was held in the Palace of Westminster in Mr. Speaker's State Apartments. Perhaps I should not have said that, as it may open the door to many approaches to you, Mr. Speaker, and I do not seek to do that. It shows the fact—it has not really been said so far in the tributes—that Jack was a real family man. Perhaps above all, to Jack Weatherill, whom we mourn—we send our condolences to Lyn, his wife and to his two sons and daughter—the House of Commons was his family; latterly the same was true of Parliament. He stood up for it. He was a great Speaker, and he will long be remembered.

Ann Winterton: I should like to pay my own very brief personal tribute to the late Speaker Weatherill. I was one of the cohort of 1983, among many colleagues who are in the House today. I well remember sitting almost diagonally opposite at the time when Jack Weatherill, as we all knew him, was dragged to the Chair. He was indeed a gentleman in the true sense of the word and was very much respected. He had a depth to him that at first, perhaps, people did not realise, and he had an independence of character. He was personally extremely kind, and opened up Speaker's House to Members on both sides of the House and their families. I remember going to Speaker's House on many occasions and meeting Mrs. Speaker, as she was known—Lady Weatherill. I would like to express my deepest sympathy to her and her family on their great loss.
	At one of those informal occasions, I was able to say to Mr. Speaker Weatherill that we had in fact met many years previously. When I was about 11, I won an award at the Royal Windsor horse show for best rider in one of the showcase classes. The prize was a pair of jodhpurs to be made by, I think, Bernard Weatherill Ltd. So I was taken by my father by train to London—a big day out—and went to this very smart tailor's emporium, where I met Jack Weatherill. I told him that I still had that small pair of jodhpurs with buckskin strappings, which we had in those days, how very proud I was of them, and how they had done stalwart service. He was extremely pleased by that story. The fact that he carried a thimble in his pocket for the rest of life to remind him of what he was showed the character of the man. He will be greatly missed. He was a great man who was much loved, and the tributes that have been paid today bear out those comments.

David Heath: On a point of order, Mr. Speaker. As the Leader of the House said, a couple of weeks ago in business questions I asked for the whereabouts of the identity card scheme cost report. It has today been published in a written ministerial statement. I have no further questions to raise on that specific issue—we now have the report. However, there is an issue for the House. What recourse do hon. Members have when the Government fail not to fulfil an expectation of providing material to the House but a statutory duty to provide material in a timely way. Could that matter be examined? What recourse is available to us when the Government fail in their statutory duty to the House?

Paul Goggins: I beg to move, That this House agrees with the Lords in the said amendment.
	I am very conscious of the fact that, as we are deliberating this afternoon, the funeral of George Dawson, Member of the Legislative Assembly, is taking place. Earlier, the hon. Member for South Antrim (Dr. McCrea) referred to the tragic event that occurred this week. We send our condolences to George Dawson's family, friends and political colleagues, and especially to his wife and two children. Hon. Members will understand that, because of the funeral, several hon. Members who would usually be present cannot be in the House this afternoon.
	In our deliberations in both Houses, we have had many discussions about clause 7 and the circumstances in which the Director of Public Prosecution's decision in favour of non-jury trial should be challengeable. I am sure that hon. Members will be pleased to hear that I do not intend to go through all the arguments again. Suffice it to say that it has been our clear intention to put the case law in Shuker on to the statute book.
	We have listened carefully to the concerns that have been expressed, including those in the report of the Joint Committee on Human Rights on the Bill. Paragraph 1.37 states:
	"A prohibition on judicial review except on grounds of dishonesty, bad faith or 'other exceptional circumstances' does not make sufficiently clear in our view that judicial review for lack of jurisdiction or error of law will still be available."
	The amendment would reassure the Committee by confirming that a challenge on such grounds will be possible, provided that it meets the threshold of "exceptional circumstances." It will be for the courts to decide whether that threshold is met in any given case. I want to make it clear that that does not mean that lack of jurisdiction or error of law will of themselves constitute exceptional circumstances in every case. That will be a matter for the courts to decide, based on the arguments put to them.
	I hope that the further change to the clause provides additional ground for consensus and confidence.

Paul Goggins: That is all. The certificate will be issued by the DPP and it will not include any of the sort of information to which my hon. Friend refers. He knows that from our earlier discussions. All that we are doing today is further to clarify the grounds on which an appeal can be made. There has been some suggestion that what we are seeking to do here is completely remove grounds for appeal. We are not seeking that at all, but we are limiting those grounds.

Paul Goggins: I am grateful for the increasing echo of support and consensus for the amendments. I am pleased that, at long last, I have been able to do something that has pleased my hon. Friend the Member for Foyle (Mark Durkan), which has not happened too often during the course of the Bill. I should also place on record that at this moment, as at others, we would have benefited from the advice of the hon. Member for North Down (Lady Hermon), who is assiduous in such matters. She is unable to be here with us this afternoon, but her contribution to debates on such issues is important.
	I have been asked further questions about two substantive issues. On the issue raised by the hon. Member for Worthing, West (Peter Bottomley), there are separate provisions for non-jury trial in England and Wales and Northern Ireland, and those are contained in the Criminal Justice Act 2003. That legislation contains references to the special provisions for non-jury trials in Northern Ireland. As we are changing those special provisions, we must also change the references in that other legislation. I am happy to confirm that in further detail in writing.
	A number of Members requested further information on the second issue, which was whether the decision on renewal will remain with Westminster or be devolved. The renewal decision will remain with Westminster. Clearly, three of the four conditions in the first limb of the statutory test relate to proscribed organisations, and the system of non-jury trial falls within that part of the Northern Ireland Act 1998 dealing with national security matters. It is therefore clear that the matter should remain one for Westminster, and that renewal should be considered by the House. That does not mean that we cannot discuss such matters with a future Justice Minister, First Minister or Deputy First Minister, as we reach a conclusion about whether to bring forward further affirmative resolutions. The decision, however, will be one for the House.
	 Lords amendment agreed to.
	Before Clause 42
	 Lords amendment: No. 3

Peter Bottomley: I support the Minister and the hon. Member for Tewkesbury (Mr. Robertson). It is House of Commons procedures that have made the position rather more awkward than it ought to be. I think that "To move, That this House agrees with the Lords but will word the amendment in a slightly different way" would be a better way of phrasing the motion.
	Some elements of the Secretary of State's amendment make elements of the original amendment more explicit, and are therefore welcome. I especially welcome the requirement for co-operation with the inspector, which appears early in the proposed new clause. The reference to the Justice (Northern Ireland) Act 2002 is another example of explicit provision that should be welcomed.
	On this occasion, I have no questions to ask the Minister. I simply think that he is right.

Paul Goggins: I am grateful for all the comments that have been made. My hon. Friend the Member for Blaydon (Mr. Anderson) was absolutely right, and I pay tribute to the work he has done as a member of the Northern Ireland Affairs Committee. As he said, community-based restorative justice schemes have great potential as a diversion from prosecution, dealing with a pattern of offending behaviour at an early stage in a way that diverts people from the criminal justice system altogether. I am sure we all support that, but there have been concerns about various schemes. What we have now is a system of accreditation and inspection that is rigorous, and can determine whether individuals working in schemes are suitable for the task. We have a robust system, including the protocol.
	I pay tribute to the Minister of State, Ministry of Justice, my right hon. Friend the Member for Delyn (Mr. Hanson), who is no longer with us now that he is happily charged with other responsibilities. He has done considerable work to establish this system, which will be continued under the watchful eye of the Under-Secretary of State for Northern Ireland, my hon. Friend the Member for Liverpool, Garston (Maria Eagle).
	There is no question of ego here. I pay fulsome tribute to Lord Trimble for his work—for the amendments that he tabled, and for his efforts to ensure that the Bill provides the certainties and securities that he seeks. My right hon. Friend Lord Rooker accepted the spirit of what was proposed, but made clear that a check with parliamentary counsel would be necessary to ensure that the amendments did all that we hoped and expected them to do. The advice from parliamentary counsel is that the amendments that he initially brought to our attention are defective, in that they make specific requirements that are not necessary. Indeed, if we made specific requirements in relation to these schemes, we would need to legislate for reports and requirements in relation to a range of others that are not included in legislation. The inspector already has the power and responsibility to make reports and recommendations, and the Secretary of State is obliged to publish them and lay them before both Houses. The position is absolutely clear.
	Let me say to my hon. Friend the Member for Foyle (Mark Durkan) and others that this matter will rightly be devolved to a future Minister of Justice in Northern Ireland. It does not relate to the matters that we were discussing earlier, and it can and should be devolved as we make progress towards the day of further devolution of policing and justice in Northern Ireland.
	 Question put and agreed to.
	 Lords amendment disagreed to.
	 Government amendment (a)in lieu agreed to.

Alan Reid: We, too, support the Government on this amendment. As the Delegated Powers and Regulatory Reform Committee has pointed, these matters are matters of discernable fact and not of opinion, and the timing is laid down. As the Secretary of State has no discretion, there is no point in having a parliamentary procedure, so we support the amendment.
	 Lords amendment agreed to.
	 Lords amendment No. 5 to 8  agreed to.

Michael Gove: It is a pleasure to see the Economic Secretary in his place today. I am grateful for his breaking off early from the celebratory lunch that I know will be taking place in No. 11 Downing street today, but given the scant number of contributors we may expect this afternoon there will be ample opportunity for him to return to the Treasury before midnight and I expect that the party will still be in full swing.
	I also thank the Economic Secretary for being so fluent and authoritative in his remarks. I wish, however, to pick him up on just one error. He seems to labour under the misapprehension that Opposition Front Benchers in some way oppose house building and development. I have no wish to detain him from the celebrations that he will attend later, but I refer him to the variety of speeches that I, my hon. Friend the Member for Tatton (Mr. Osborne) and my right hon. Friend the Member for Witney (Mr. Cameron) have made, in the House and elsewhere, identifying the need for more housing development in our country and making the case that without additional house building we will not have the supply to meet the demand that exists. Without that additional house building, we will not be able to help first-time buyers on to the property ladder as they deserve. I am always happy to reach a consensus with the Economic Secretary and with his hon. Friend, the Minister for Housing and Planning. Every opportunity to reach a consensus on the need for more house building is one that I am delighted to take.

Edward Balls: We have discussed this issue regularly over the past few years in proceedings on the Finance Bill and, from time to time, over breakfast, as the hon. Gentleman acknowledges. I understand that speeches have been made containing general statements about the support for house building and first-time buyers, but statements are also regularly made on the websites of the hon. Gentleman and his Front Bench colleagues that oppose house building in their own constituencies. Have those website references been removed or do his nimby tendencies continue to flourish in his constituency?

Michael Gove: Thank you, Madam Deputy Speaker. Your intervention enables me to make the point that struck all of us listening to the Economic Secretary. Fascinating as it was when he gave us a tour d'horizon of market rents in the commercial sector, the real aim of his speech was not so much the more effective operation of the property market as to speak in service of yet another tax increase. Fluent and authoritative as he so often is, all that fluency and authority were bent towards one end—ensuring that the Chancellor can get the £900 million additional revenue that this measure will raise every year. The most compelling argument in favour of the measure was not made at the Dispatch Box today by the Economic Secretary, but in the Red Book when that figure was produced. That is the principal justification for the change. The Chancellor's imperative is plugging his black hole, not the sensitive rebalancing of rates and reliefs to secure the better working of the property market.
	The Economic Secretary mentioned Sir Michael Lyons's report, and it is fascinating reading. If the Economic Secretary had told us everything that the report contained, he would no doubt have reminded the House that it had suggested that any change to the relief be introduced only in 2010 after extensive consultation. He is introducing it two years before Sir Michael envisaged, without the consultation that he requested.

Michael Gove: As ever, my hon. Friend makes an excellent point. Some of the Economic Secretary's comments about the support that he wishes to see for small business would carry more credibility if the Budget that he helped to co-author had not been responsible for such a comprehensive tax hit on small businesses overall. The record of the Economic Secretary and the Treasury in supporting small businesses is far from exemplary. In that respect, one can understand the degree of scepticism on this side of the House.
	I wish to raise three broad issues in connection with this measure, and I have several specific questions. I appreciate the kind invitation from the Economic Secretary to reach a measure of consensus. As I said earlier, I love consensus and I always like to reach it whenever possible. But we can be certain that the measure is worthy of support only if we get satisfactory answers to those questions. The three broad areas are a matter of theory, a question of principle and the reality in practice.
	On a matter of theory, on what basis do we levy business rates? What is the theoretical principle behind them? As widely understood, they are a tax on business activity. As my hon. Friend the Member for Peterborough (Mr. Jackson) might say, it is one of all too many taxes on business activity. Nevertheless, business rates are an accepted part of the Chancellor's portfolio. Business rates are supposed to be a tax not on land values but on commercial activity. That is why there is a relief when there is no activity. Changing the principle to remove that relief does more than increase revenue: it changes the very nature of the levy, and it raises key questions in turn.
	The principle that there should be tax relief on empty properties was outlined by the admirable Kate Barker, whom the Economic Secretary prayed in aid in support of the measure. However, it is also clear that, in her report, she made the case for a relief on business rates when properties are empty. She said:
	"The principle behind empty rates relief is to create a broadly symmetrical tax, given uncertainty. When property earns a positive revenue, it is taxed; when it does not, relief is granted. This helps remove what would otherwise be a distortion."
	According to Kate Barker, therefore, the Government, by removing the existing relief, are introducing a distortion. They are levying a tax that should be designed to get revenue from activity on property that is inactive and, in the process, changing the nature of the tax itself.
	Why? Do the Government accept Kate Barker's argument that the change would be a distortion? If not, why not? What is the justification for the change?
	We acknowledge that, all other things being equal, the change will raise revenue. The Economic Secretary said with some pride that the amount would be £900 million. However, that tax increase raises another issue. One of the principles underpinning business rates is that, overall, the yield nationally from them should remain broadly neutral in real terms. In other words, when business rates rise, they should do so broadly in relation to the retail prices index.
	If the proposed change is made, the amount generated by business rates will increase by more than the rate of inflation—even as that has been adjusted under this Government, and even as inflation rises and the Governor of the Bank of England writes to the Chancellor warning of the consequences.
	The question that we have to ask is as follows: are the Government contemplating a balancing reduction in the burden on business? My hon. Friend the Member for Peterborough (Mr. Jackson) asked that question earlier. Alternatively, are the Government breaking another golden rule—that business rates should not be used to make up losses elsewhere?
	The danger in using business rates as another source of revenue to make up shortfalls elsewhere was explored in the review by Sir Michael Lyons. The Economic Secretary also prayed in aid Sir Michael in support of his argument, but we should look at what he actually said. Sir Michael said that
	"the national business rate is not an appropriate way to raise additional resources to fund services...particularly given the high level of taxation on property that business rates represent, by international standards".
	Are the Government therefore breaching that principle as well, and rejecting Sir Michael Lyons's advice? In his report, he made an explicit recommendation:
	"The RPI cap on the national level of business rates should be retained."
	Will the Minister for Local Government spell out whether the Government agree with that principle? If so, given that the measure amounts to a tax increase, will there be compensation elsewhere in the level of business rates? I shall be very interested in the reply.
	I have asked a series of questions about the theory of the business rate, and all of them touch on the fact that, under this Government, business faces a bigger burden of taxation than ever. I now want to move to the key issue of principle at the heart of the relationship between business and Government—the need for certainty.
	When business is asked what it wants, the answer nearly always is that it wants certainty and stability. However, some businesses fear that this change will jeopardise all that. Many will have built the rate reliefs into their plans and accepted them in their balance sheets, and altering the reliefs could throw into uncertainty a series of developments that would bring economic growth and regeneration to parts of the country.
	Conservative Members' guiding principle is that the tax system should raise revenue and support economic growth and development wherever possible. The process of assembling suitable sites for redevelopment or of putting together the complex business deals that can bring regeneration is often complex, with many variables. Some companies might have to accept that some sites will be left vacant for longer than might be desirable in other circumstances. For instance, they might be left vacant until the correct combination of land sites and finance is in place to make a significant regeneration project truly viable.
	For some deals, the existing reliefs will have been factored into the equation already. Under the changes proposed by the Chancellor some companies will have to look again at potential regeneration projects.
	That consideration is more than theoretical. I am sure that the Economic Secretary will have read this week's  Property Week. It reported that, as a result of the measure, a company called Palmer Capital Partners had suffered what was described as an £80 million "hit". The company has had to "scrap" a project on which it was planning to embark as a direct consequence of the proposed change. Regeneration projects and economic growth that would have taken place are now not happening. A director of the company, Alex Price, said that it could not go ahead with the plan
	"because we couldn't quantify what business rates would be."
	That shows that an element of uncertainty had been introduced into the calculations, with the result that the project could no longer go ahead. I would be grateful if the Minister for Local Government let me know what assessment was made of the potential impact on current regeneration projects that were factoring the relief into their calculations. That is not merely a theoretical concern, as it goes to the heart of the active business of regeneration today.
	I have discussed the theory of business rates, and the matter of principle in connection with certainty. I turn now to some specific matters of reality, in an attempt to discern what happens on the ground when it comes to regeneration. I have a series of questions to which I hope the Minister will respond.
	First, it is appropriate that we learn from history. A very similar measure to the one being proposed was introduced in February 1974, when the Conservative Government of the day were on their way out and desperate to secure tax revenue by any means necessary. If any historical parallels suggest themselves, I am more than happy that Ministers should draw them.

Vincent Cable: As this is a pre-legislative phase, where we are asking broad questions rather making forceful assertions about legislation that we have not yet seen—I agree with the hon. Member for Surrey Heath (Michael Gove) that that is the best way to approach the measure—I want to start by asking about the process.
	The Economic Secretary based his presentation on the Lyons recommendations, and although it is certainly true that the Lyons report recommended precisely what the Government want to proceed with, that recommendation does not quite fit with his recommendation in a later paragraph, which is not a criticism of the Government but of the report. In paragraph 8.6, Lyons recommended that:
	"The Government should conduct a review of exemptions and reliefs to consider the scope for removing inappropriate subsidies and distortions, and to simplify the system."
	There was thus a firm recommendation, but also a recommendation for a review, so it was not clear how the two would hang together.
	Having read through the relevant paragraphs of Lyons, it is fair to say that although he made a firm recommendation, on which the Government have acted, his arguments were more equivocal and balanced than those in the Minister's presentation—I know that the hon. Gentleman takes economic arguments seriously. Lyons called in aid Tony Atkinson and Stiglitz, who made a good theoretical case for keeping empty property relief, because of the risk-sharing problems. So, there are clear arguments on both sides, which is all the more reason to have proper consultation and consideration.
	The other reason why the process—whatever the outcome—needs to be carefully staged is that the feedback that the Government have had from both interested and disinterested bodies is not clear cut either. The Federation of Small Businesses is quite supportive of what the Government said, but it made the interesting recommendation that the legislation should take account of the fact that some businesses are making a genuine effort to fill their property. It is not clear how the legislation will accommodate that. The Campaign to Protect Rural England was, again, broadly supportive of what the Government are trying to do, but it said that the Government must undertake the measure in conjunction with changes to the VAT regime to make it more attractive to improve property. The Royal Institution of Chartered Surveyors and the British Retail Consortium were much more critical. The first issue is about the process and why the Government cannot undertake a process of consultation over the next year or so, which is what Lyons appeared to envisage.
	My second set of questions is about the revenue implications. The hon. Member for Surrey Heath has suggested that, whether we call this measure a withdrawal of state aid or a tax, there clearly are major revenue implications. That may indeed be right. First, I would like to be clear what the implications are. In his speech, the Minister referred to various offsets. I want to be clear whether he envisages a full whack of £950 million on the commercial property sector or whether there are any offsets and, if so, what they are.
	My other question is about the behavioural implications of the change. I think that the Government are arguing that the measure is necessary both to raise revenue and to change business behaviour to make it more efficient. There is nothing wrong with that. In the context of environmental taxation, we argue—as do the Government—that it is possible to raise revenue and change behaviour at the same time. There is nothing wrong with the argument, but I want to be clear what assumptions the Government are making. Lyons implies that the cost of empty property rate relief is £1.3 billion. The Government say in the Red Book that they will raise an additional £950 million. Does that mean that the difference is accounted for by improvements in the utilisation of commercial property? Are the Government assuming that commercial property use will improve by a factor of a quarter? Or are the figures completely unconnected?
	A related question is: who will pay the tax? As we know, with all business taxation, the cost is shifted in one direction or the other. There is an assumption that the tax will be paid by inefficient landlords and over-exuberant speculators, but is that in fact the case? We must assume that, in most cases, the increased taxation of commercial property will, at some point, be paid for by occupiers. It could be paid for by the landlords' other occupiers or in the form of longer leases.

Robert Key: I am tempted to say, "What a splendid day to bury bad news," but I do not want to go there, because I want Ministers to listen carefully to what I have to say and to take it seriously. So far, this has been an urban debate about the impact of the change, but I want to change the focus and consider the impact on the countryside and the greater proportion of the United Kingdom's land area. In other words, I want to focus on the impact on rural economies.
	We need to start from the point that my hon. Friend the Member for Surrey Heath (Michael Gove) made, which is that the measure is really no better than a window tax. It is a revenue-raising tax, and it is none the worse for that—Governments of all colours introduce taxes. They need the money and it is amazing, really, that we have avoided the measure thus far, but as a grab on a particularly vulnerable area, the proposal is not much better intellectually than the window tax. Under the window tax, windows were blocked up and light was kept out of the lives of hundreds of people across the country, and I fear that the proposal might have the same impact.
	The Economic Secretary pointed out, fairly, that he is making special provision for what he called low-demand areas. Of course, those are not just the assisted areas to which he referred. Indeed, it is only nibbling at the edges to talk about land that qualifies for remediation relief. He referred to us to the planning White Paper, and I want to talk about the impact on, and interaction with, planning. It is important to realise that a vacant property tax hike will hit the rural economy. It will discourage the farming sector from diversifying and from changing old farm buildings into business units.
	The Country Land and Business Association has commented that there will be an impact on rural business. It says that the measure will
	"slow down and reduce the overall growth of the rural economy".
	Interestingly, it estimates that the measure will reduce the tax take for the Treasury over time. My hon. Friend the Member for Surrey Heath mentioned the consequences of having derelict property, which we experienced in the 1970s—property that is not capable of beneficial occupation is exempt from business rates, and I fear that we could find ourselves staring that same situation in the face again if we are not careful. I am sure that we all wish to avoid that.
	The National Farmers Union also has reservations. It points out that the situation in urban areas is different from that in rural areas and that both converted buildings and new build
	"can stand empty for months awaiting a suitable tenant in some rural areas."
	There is a fair consensus on that point, but I want to back up my arguments with three cases taken from my constituency that illustrate my fears. The first case concerns hard-to-let village premises. Anyone with a rural constituency will know the problem of a pub closing and the owner applying to convert it into a house. The village usually reacts by setting up some sort of co-operative venture to try to buy the pub and run it. The problem is that if people do not buy their beer in the pub, it does not matter who owns it—if it does not make a profit, it is going to close. There are implications, too, for the village shop and post office, which are in a similar situation. As someone who spent a very happy nine years living near South Newton in my constituency, I was familiar with the post office in that village. However, it did not thrive. It was run by a wonderful couple—Mr. and Mrs. Hutchinson. Heather was born in the village, so there was no question of a lack of loyalty to the village. However, the Hutchinsons decided that the time had come to retire, so they tried very hard to let the property. As far back as 2001, in fact, they tried to do so. They put the property on the market for six months, as required before a change of use, but they did not make a sale. They waited and they eventually found a tenant. They invested £14,000 to adapt their property so that it could be used as a hairdressing salon, which involved a change to A1 use. Sadly, however, the tenants' business failed, so the Hutchinsons were left with nothing.
	Mr. and Mrs. Hutchinson took professional advice again and they submitted an application to the planning authority. The planning committee agreed, but the regulatory committee threw out the application. They have now been told, some seven years after the original decision, that they must go back to square one. They have spent almost £20,000 because of the planning system, which impacts on such matters, as my hon. Friend the Member for St. Albans (Anne Main) rightly said. I referred the matter to the head of development services and asked which planning policy was causing apparent distortion in the market. It was Salisbury district planning policy PS3, which says that
	"The change of use of premises within settlements that are currently used, or have been used for retailing, as a public house or for providing community facilities central to the economic and or social life of the settlement, will only be permitted where the applicant can prove that the current or previous use is no longer viable."
	That is the justification for the distortion. The fear is that as a consequence of the proposals, in the intervening period after the planning authority, acting on behalf of the local community, has decided that people should not be allowed to stop a shop being a shop if no one wants to buy anything there, the owners must pay business rates on the property for years. It is not their fault—it is because the planning system has introduced a distortion in the market allocation of resources. That is a very important issue that I hope Ministers will consider.
	My second case concerns redundant farm buildings. Late last year, my constituent, Philip Kitson of Manor farm in Chilmark, referred me to a problem with a unit in his farm buildings. He has wonderful farm buildings, but they are completely useless for farming. They were built in the early 19th century, and one could not get a quad bike in there, let alone a modern tractor. The Kitsons did what the Government wanted and diversified. They sought to convert the property, and they did so professionally and successfully. However, tenants move on, so they were left with a building—in this case, a B1 workshop and office premises. They therefore had to find money for business rates for an unoccupied building . Mr. Kitson pointed out to me:
	"We are a farming business, not a property company, and have no alternative sources of income to offset any loss of rental income...we have invested a considerable amount of time and money renovating buildings for rental which have rarely been empty."
	The district council has benefited hugely, at no risk to itself, because those buildings are bringing in business rates.
	In the end, the matter went to the desk of the Minister for Local Government—I am pleased that he is in the Chamber today—and he and I have been in correspondence for some months. Referring to the Lyons report, he said to me in a letter of 17 April this year:
	"We understand that these reforms will increase the liability on owners like Mr Kitson. However, as the Chancellor's announcement made clear, the purpose of reform is to enhance the supply of commercial property, reducing rents and improving access for new and existing firms. Downward pressure on rents will have significant benefits for UK business and wider UK competitiveness."
	That is not what the local market says in my constituency, where there is already overcapacity. It is all very well saying that that might be the impact in urban areas, but in scattered rural communities in south-west Wiltshire there is already overcapacity in such units, and I fear that the measure will make matters worse. Can we be quite sure that when Ministers are working out the process and the machinery for introducing the change, they take due account of the need to be careful about rural proofing the measure? The least they should do is introduce it over a number of years and not say, "From 1 April 2008, wham! Bang! You're going to have to pay the bill."
	My third example is a very particular example.

Edward Balls: I want to understand the hon. Gentleman's argument. I am worried that the point he is making is not market-based and is more dirigiste. When he uses the term overcapacity, he means properties that are unused. Are they unused because there is no demand or because the rent is too high? Are we not looking for a way to get the price down so that they can be put back into use and there can be more activity?

Robert Key: That is an entirely fair point. Without getting into either endogenous growth theories or Marxism, I would point out that the Minister is right to ask the question, but the answer is no. The problem is overcapacity, not rents that are too high. I will illustrate that with my next example.
	We have a large number of former military establishments in my constituency and in Wiltshire as a whole. One of them is the former royal naval armaments depot at Dean Hill, which was built in 1938 and became a major armaments depot, storing under the chalk hills enormous quantities of arms for the Royal Navy from Portsmouth, and latterly for the RAF as well after the closure of RAF Chilmark, which was another establishment that was redundant to the needs of the Ministry of Defence.
	The area is huge—some 500 acres with 1,600 sq m of office space. It has a variety of business units—more than 40 of them—and 24 vaults cut into the chalk offering more than 9,000 cu m of high quality dry, secure storage. That is where the bombs and depth charges were kept. The problem is how the Ministry of Defence disposes of property. It is part of the Chancellor's remit to persuade the MOD to get rid of redundant property.
	After the property had been empty for years, a splendid company has taken over the site, bought it from the Ministry of Defence, and is successfully converting it to very attractive office and industrial premises in a wonderful environment, with a site of special scientific interest on the spot. I cannot speak warmly enough of the effort of Mr. Richard Parry and his company, who have taken a substantial risk. Having taken over 500 acres from the MOD with all those buildings and facilities, which they had expected to be able to bring into use over a number of years—with the agreement of the planning authorities in order to avoid overdevelopment, too much traffic on rural lanes in south-east Wiltshire and Hampshire and so on—they could now face a crushing liability for business rates if the measure is suddenly introduced now.
	That will dissuade investors like Mr. Parry. They simply will not do it. The holding costs of the property will be too great. What about valuation? The district valuers already value Ministry of Defence estates, but they put them on a low value because they are of military use or are not used at all. To return to the point made by my hon. Friend the Member for Surrey Heath, they are not producing business activity or generating wealth, so they currently do not qualify for taxation. What about the district valuer now? He has been to Dean Hill park and assessed individual buildings. As they are brought into use, the district valuer assesses them and the owners rightly start paying their business rate.
	What will happen in future? We need to be sure that Ministers have thought about that. Will they suddenly create an extra army of district valuers who can go round to all these Ministry of Defence sites and revalue hundreds of buildings and other facilities? Have they got the staff to do it? I guess not. When will the clock start ticking? Will people have to start paying this new business rate on 1 April next year or six months afterwards? Perhaps the Minister has not thought that question through yet, but I would be grateful if he could answer it.
	We see here, once again, the need for rural proofing. I wonder what the Ministry of Defence will say about this, given that the defence budget is still strapped, despite a modest increase in cash terms. The pressure on it is enormous. Will it be liable to pay the new business rates on all its empty industrial properties, given that it no longer enjoys Crown exemption? I would be grateful if the Minister could answer that, and I dare say his colleagues in the MOD would like an answer too.
	I have tried to draw the House's attention to some of the problems that will affect everybody in rural areas, from large investors to very small family businesses, as well as farming communities. If we must have a window tax, let us make sure that it does not keep the light out.

Phil Woolas: We have had a good, short debate. I commend hon. Members on the thoroughness of their research. The points have been made reasonably and, in response to the tribute to my hon. Friend the Economic Secretary, eloquently and authoritatively. It is right and proper that we reply as fully as possible to the points made.  [Interruption.] The hon. Member for Lichfield (Michael Fabricant) on the Opposition Whip's Bench is teasing me; I am not going down that route.
	The hon. Member for Peterborough (Mr. Jackson) questioned the process that is taking place. The Ways and Means resolution arises from the Budget and, being a matter of local taxation, cannot be considered in the Finance Bill, as would be the case with other Budget measures. It is also worth pointing out that I considered whether there was appropriate scope for the measure in the Local Government and Public Involvement in Health Bill, but it is specifically not a finance Bill. We have therefore facilitated debate through the resolution and, to allay Members' fears, there will be further debate on Second Reading. Although it is a finance measure, there will be consideration of the detail of the Bill in the other place, should the House pass the resolution today, as I hope that it will. If I am not able to answer all the points that have been reasonably raised, I commit the Government to attempting to do so, should the House pass the resolution, in further consideration.
	An important point has been made about the possible impact of the measure, and constituency Members of Parliament have done their research. The hon. Member for Salisbury (Robert Key) in particular has researched the possible impact on the three examples that he gave. The law of unintended consequences bedevils legislation, so we must give the matter proper consideration.
	The hon. Member for Surrey Heath (Michael Gove) set out a logical argument based on theory, principle and practice. Let me deal with the theory first. Non-domestic rates are not a tax on business activity, but a tax on property. The domestic rate is partly a tax on property, for property services, and partly a tax on individuals. Although Members have referred to business rates today, the motion refers to non-domestic rates. That answers the points made by the hon. Member for St. Albans (Anne Main), who sought exceptions.
	As for the hon. Gentleman's points about the principle, there is a misunderstanding—I forgive him for perpetuating it—that bedevils the debate about non-domestic rates, and I am grateful to Sir Michael Lyons for shedding light on it. Many people assume that the retail prices index cap on non-domestic rates is a cap on the individual bill paid. Non-domestic rates, unlike council tax, are based on the rental rather than the capital value, although some argue that the system should be different. In considering the impact of this measure, therefore, we must consider its impact during the two periods before and after revaluation.
	That pulls the rug from under the feet of those who say that this is a smash-and-grab raid on businesses. The intention of the measure is to decrease rents across areas. By increasing the supply of available premises, it will decrease rents after revaluation. In this country there are regular revaluations every five years, as there have been since the system was introduced. It is worth noting that revaluation for the purpose of non-domestic rates proceeds without a murmur in the House or a column inch in the newspapers, in stark contrast to the hundreds of thousands of column inches devoted to the non-revaluation of domestic properties. That, to my mind, justifies my policy of not proceeding with the domestic revaluation: goodness knows how many column inches would be spilled if such a revaluation took place.
	The principle of the RPI cap is clearly there, and I restate our commitment to it. That is important, because it will decrease rents in the future. The hon. Gentleman assumes, however, that it is a simple cap on the yield. In fact, the cap is on the increase in the business rate multiplier—what we all know as the penny in the pound. We used to call it rateable value, and I think we should reintroduce the term because more people understand it. I make that commitment as well: I shall not use the horrible phrase "business rate multiplier" again.
	The exception arises at the time of the revaluation, when overall rateable values increase if that is the way in which the market is going. The multiplier is adjusted, and the resulting increase in yield is pegged to inflation. That has been the case throughout the system of non-domestic rates, and it is a very strong pro-business measure. It deals with the point that the hon. Member for Surrey Heath rightly made about general stability. We must remember why uniform business rates were introduced in the first place. I think it right for me to concede that my party got it wrong before that. Our actions led to instability, and were bad for business.
	As for the practice, the hon. Gentleman asked a number of questions—more than he said he had. I counted 10, although he said there had been seven. In any event, I shall try to answer them as best I can.
	The accusation has been made that pension funds may be damaged because they hold property portfolios. Empty properties are only a small part of pension fund portfolios, and portfolios that are occupied will benefit in the medium and long term from the reduced rents that will result from the pincer effect that I have described. I do not accept the hon. Gentleman's point in respect of the short term either. The actively managed property portfolios experience low levels of voids. However, the most important determinant for growth in yields to pension companies and other investors in property is demand from the wider economy. I do not dismiss the point that has been made, but I always think that it is a good debating point to look at one side of the equation. The argument about pension fund tax misses the point that corporation tax was reduced at the same time; from the overall point of view, that must also be considered.
	I hope that I have answered the point about consultation and proper parliamentary scrutiny. The next question that was asked was about the alleged failure to consult on what is an appropriate rate-free period. A three-month rate-free period currently exists, and we will not change that—there is certainty in that regard. The Kate Barker review found that there is no structural difference in the propensity of properties in different sectors to fall empty. None the less, we will provide an additional three months of rate-free period for industrial property, returning the total rate-free period to six months, so there is movement in that direction. We can debate these matters.
	It has been argued that there is no evidence to justify the making of the reforms that alter the rate and the length of the rate-free period and that there is also no evidence of what their exact nature will be. That was also addressed by Kate Barker and Sir Michael Lyons. As has been said, she carried out a fairly thorough assessment of the case for reform, and so did Michael Lyons. That is part of the evidence base that we are using in bringing forward our proposals. However, I concede that there is a question to do with balance in respect of some of them.
	The hon. Gentleman also asked questions that perhaps anticipated an economic downturn should his party ever form the Government; the DNA and mindset of the Conservative party is to plan for recessions, as that is what its experience shows happens. The Bill will provide—I appreciate that Members have not seen it, so I do not criticise those who asked about this—a new power for the Secretary of State to reduce the rate for empty properties from the new level of 100 per cent. of the occupied rate back to a minimum of 50 per cent. There is some flexibility in that measure. The hon. Gentleman should not now rush away and write in his newspaper column that the Government plan for a recession; there is always a danger of that happening when we talk about introducing prudent and cautious measures. It is important that measures such as this one are not locked in stone.
	The hon. Member for Salisbury referred to the Valuation Office Agency. It is already the case that an empty property is valued, so we do not anticipate a surge, or even a blip, in the work of the VOA. Its work is already part of the tax base. The hon. Member for Surrey Heath will know—perhaps from reading lurid headlines, which I think of as scaremongering—that we are computerising the valuation process.  [Interruption.] Well, it is the central premise of the Conservative argument against our policy that we are doing that, so it is not fair of Members to criticise this point. We are successfully computerising the valuation process. The VOA has been successful at non-domestic rates revaluation, which has passed without a comment; I have been surprised about that. That is a reasonable point to make.
	The question was also asked why this measure will be implemented in 2008, rather than in 2010. Lyons' recommendation was of course linked to the revaluation process, and we propose to introduce the measure in 2008 because we believe that its benefits—I do not mean just the increased revenue, which I shall come to in a moment—are required now. As my hon. Friend the Economic Secretary explained, relatively speaking we have very high rents. In my view and as the  Financial Times reported this morning, it is daft that the taxpayer effectively subsidises empty properties, given that we have among the highest rents in the world. When my constituents heard that rental values in Manchester are higher than in Manhattan, they were surprised, as was I. So I checked it out and it proved to be true.
	On the question of certainty, I appreciate the point that the hon. Member for Surrey Heath was making about the micro level. However, stability will be provided at the macro level because, as evidence shows, if the policy is successful—as we of course expect it to be—it will have a beneficial effect in the medium to long term. I have already dealt with the point that he made about the Lyons report and increased revenue from empty properties.
	Members also asked about assessing the location of empty properties and whether there will be differential effects. It is clear that the policy needs to be examined in relation to areas such as the cities of London, Manchester and Birmingham, and Slough, which my hon. Friend the Economic Secretary mentioned. Analysis of England by region and by value shows that, unsurprisingly, the north-east and the south-west have the lowest figures.
	Some important points have been made about regeneration areas, and I was grateful for the recognition earlier of my own commitment to regeneration; I did indeed not only read the available evidence, but consulted some of the urban regeneration organisations. Renovation funds are available in areas with Department of Trade and Industry assisted area status. However, compared with areas such as the City of London, a major obstacle in regeneration areas is of course the availability of land. We do not believe that there will be a negative impact on business confidence as a result of this measure. For example, redevelopment and regeneration schemes in Liverpool are already making available £8.2 billion for development, with planning permission already granted. That is not related, except in a tiny way, to the empty property issue. I concede that one has to consider the impact in different parts of the country, and Members have made strong points about the potential impact on their local economies. If I cannot deal with those points today, I hope to be able to do so on Second Reading, should the House resolve this motion today.
	The hon. Member for Twickenham (Dr. Cable) called for further consultation, which is clearly desirable. However, we in this country sometimes suffer from consultation fatigue, and Opposition Members have criticised us for having too many independent reviews. One cannot have one's cake and eat it, but the point about consultation, particularly parliamentary consultation, is a fair one. The hon. Gentleman also referred to the twin objectives of raising revenue and changing behaviour, both of which are indeed objectives in this policy area. Such measures are part of the revenue-raising measures in the Budget. They have to be taken in the round, alongside decreases in corporation tax over the years—and, of course, the most successful stewardship of the economy in our country's history over the past 10 years. I shall say that especially loudly today. However loudly or softly I say it does not change the fact that it is true, and I wish that people would sometimes listen to the argument and not who is making it.
	The hon. Member for Twickenham asked about the £1.3 billion in Sir Michael Lyons's report and the £950 million. It is important to point out that in our assumptions we build in a £900 million figure in year two, recognising that the impact overall will be to lower rents. That addresses the point that the hon. Member for Peterborough (Mr. Jackson) rather sceptically—I do not say cynically—raised. I think that he called the measure a stealth tax or a smash and grab raid. It is not. It is part of the revenue-raising measures, but it will also have the desirable consequence of changing behaviour, as the hon. Member for Twickenham pointed out.
	We want to bring empty properties into the market. It is ridiculous that companies leave properties empty, whether intentionally or not. I do not have examples of companies that deliberately set out to do that, and I suspect that it would take a private detective agency—

Phil Woolas: I shall move swiftly on, Mr. Deputy Speaker, as both you and the Whips are looking at me very sternly.
	I have answered the point made by the hon. Gentleman about increased numbers of the homeless in bed-and-breakfast accommodation and the resolution. Other hon. Members asked whether the measure would result in companies deliberately vandalising properties or removing roofs, as happened in the past. It is proposed that we consult on measures to prevent that from happening. Generally, we take the view that that is not a likely consequence because the economic circumstances are so different from those of the 1970s. However, it is an issue that we need to address. We have, of course, consulted organisations, as I have said.
	The hon. Member for Salisbury made three strong points. I wish that he would make those points to the supporters of the sustainable communities Bill. I agree with their objectives, but they seem to think that simply passing a resolution would save Manor farm, the pub and Dean Hill in his constituency. Clearly, those are matters that we will have to look at.
	The hon. Gentleman also talked about planning policies that obstructed success. All constituency MPs are familiar with that, and there are empty pubs in the urban areas of my constituency as a result of planning problems. The proposals that the Government are bringing forward today must be seen in conjunction with our planning proposals, but I point out that the small business rate relief scheme applies to such businesses when they are active. The hon. Gentleman made a well researched speech, and we will reply to the specific questions that he raised.
	The same is true for the hon. Member for St. Albans, whose speech contained four broad points. The third and fourth concerned deliberate vandalisation and the Valuation Office Agency, and I have answered those, but she also referred to Tesco. It amuses me that the Opposition have discovered that company to be public enemy No. 1, as I should have thought that the party of the free market would support successful companies such as Tesco.
	Curiously, the hon. Member for St. Albans also said that the local development framework had been overridden. If that is the case, I should like to help her.

Alan Beith: That is one of the factors I had in mind when I said that there are many reasons why there are difficulties with the two-tier system. The hon. Gentleman is right: the financial formula has not worked in Northumberland's favour at all. Indeed, one of the merits of the two-district solution is that sparsity may be taken more into account, instead of being masked by the fact that there is a significant urban population. Furthermore, some of the deprivation factors that apply in urban areas might be given more weight if there were two separate authorities. At present, we miss out on all sorts of things that are intended for rural areas even though we are one of the most sparsely populated areas in the country, because there is a mixture of extremely sparse and highly concentrated areas of population in the same county.
	If the two-tier system were to continue, lots of joint working would be needed, but the county has shown no willingness at all to engage with the idea of enhanced two-tier working. There have been approaches from the districts, but the county has shown no interest. There is a danger that we may still end up with a two-tier system and no great prospect of changing or improving it; Northumberland may be put on the "too difficult" pile, because two possible unitary solutions are in play. That would be a pity, because we need to move forward in some way and I am disappointed that the county has not actively pursued the enhanced two-tier alternative.
	That all six district councils in Northumberland have agreed that there should be a two-unitary solution is extremely unusual in local government reorganisation. The councils are controlled by different parties and in most cases there is no overall control, but every district and every political party involved agreed on the same solution. The county leadership decided to put forward a one-unitary solution, but it could not get that through its own council, despite having a majority. It had hastily to redraft the resolution supporting a single authority solution to indicate that both proposals were going forward. Without the acknowledgement that both proposals were valid, its resolution would not have got through at all.
	The Northumberland proposal is a one-size-fits-all approach and is not capable of responding to the needs of the diverse communities of the county. There are two distinct parts of Northumberland. When I say "Northumberland", I mean the present administrative county. If we were talking about the real Northumberland, we would be talking about areas long since transferred into other authorities such as North Tyneside and Newcastle. This is not an argument about the historic county of Northumberland, which is much bigger and has a much larger population than the administrative county whose future as one or two unitary authorities we are discussing.
	Within the administrative county, there is an urban south-east and a rural area of west, mid and north Northumberland. Not a single member of the county's cabinet comes from the rural area and I think that there are only two members on the executive of the county council who come from outside the Wansbeck and Blyth Valley districts. That is an inherent weakness in the way in which things work and its results can be seen in the decisions that the county takes.
	Many regional organisations say that unitary status is needed and that they will work effectively with whatever structure is implemented, because they think that it will be more efficient than a two-tier system. The White Paper is all about allowing citizens the opportunity to shape the communities that they live in. In that case, why are we still considering a single unitary proposal that does not have the support of Northumberland residents, its community organisations, its district councils or its Members of Parliament? Instead, we have the option of having a rural Northumberland authority, with a population of 164,000 and a south-east Northumberland authority, with a population of 142,000. Let me just underline the difference between the two. The population of the rural area works out as one person for every 3 hectares; the population of the urban south-east proposed authority works out at 10.6 people per hectare. That gives an indication of the fundamental difference.
	On 27 March, the Department for Communities and Local Government announced which proposals were going forward to stakeholder consultation. To quite a lot of people's surprise, in Northumberland two proposals went forward: the county's proposal for one unitary authority and the districts' proposal for two unitary authorities. I think that all the councils in Northumberland would probably have preferred the Secretary of State to identify a single preference, but, along with Bedfordshire and Cheshire, we have two potential solutions and probably a longer period of uncertainty.
	Why is that so, when the people of Northumberland have already voted on the matter? In the referendum in November 2004 on regional government, they were given the opportunity to decide between a two authority solution and a one-authority solution in exactly the format that they are now proposed. Some 56.2 per cent. voted for the two-unitary option and only 43.8 per cent. opted for a single council. Far from there being any evidence that opinion has moved in favour of a single authority since then, an ICM opinion poll in December 2006 showed that 67 per cent. were in favour of a two-council option.

Alan Beith: The hon. Gentleman is absolutely right to quote that statement from the boundary committee. I agree with it.
	The Government have put forward assessment criteria against which the authorities have to be measured. Both bids qualified as capable of delivering savings. Some people expressed concern about whether there is an element of cross-subsidy from the urban to the rural area that might be lost if we had a two authority solution. My belief is that that will almost certainly be offset by what happens with the funding formula—for the reason that I gave earlier. At present, the rural area is deprived of the provision that the Government rightly make available for sparsely populated rural areas because its figures are buried within those of a larger area with a substantial urban component.
	Three different marks could be given for the likelihood that the outcomes specified in the criteria would be satisfied: a high likelihood, a reasonable likelihood and little likelihood. Both bids passed on all counts, so it was judged that there was at least a reasonable likelihood of each of the criteria—affordability, cross-section of support, strategic leadership, neighbourhood engagement and service delivery—being achieved. However, I am puzzled by how the scoring was done. For example, the proposal for a single unitary council got a reasonable rating for cross-section of support, but there is absolutely no evidence whatsoever that there is a cross-section of support in Northumberland for the county's single-council solution. In fact, there is a great deal of evidence to the contrary. The districts' two-council bid also got a reasonable rating for cross-section of support, even though all the evidence shows that there is a high cross-section of support for that proposal.
	Councils have not yet been given any information about the rationale behind the scoring, except for that in the Department's letter of 27 March. Having scored the criteria, the Department seems to be saying that the really important issue is whether the overall threshold is passed, rather than the scoring of the individual criteria. However, during some of the discussions, a lot is being made of the scorings that have been achieved.
	Let us consider the cross-section of support again. I have mentioned the referendum and the opinion of the four Northumberland Members. More than 100 local organisations support the two-authority option. That bid has as wide a cross-section of support as could be achieved for any reorganisation proposal. However, the county council's bid was only just supported by that council when it was considered alongside the other bid, so the support was very qualified. Some regional stakeholders said that they were doing no more than commending unitary government in principle, rather than distinguishing between the proposals.
	Most of the regional bodies that have indicated support for the county's bid are much bigger than the county itself. It suits them to have fewer local authorities to deal with, and their structure does not address the problem that we are examining: how to keep local government reasonably local. The arguments about the police are sometimes cited. The police force covers a much larger area than the existing county and it wants to be bigger still. It wanted to amalgamate with two further police forces, but the Government wisely decided that that would not be a good idea. I do not think that the police authority is the best body on which to rely in this matter, given that the Government have not seen fit to support the authority's record. The White Paper is about putting communities at the centre of decision making, so the scoring should have reflected that more accurately.
	Curiously, the scoring received by the proposals on strategic leadership did not seem to be entirely accurate. However, perhaps even more doubtful is the scoring on neighbourhood engagement. Some councils have scored extremely well on neighbourhood engagement. Blyth Valley is a beacon council for community engagement, while Wansbeck district council's LIFE—local initiative for everything—model has been praised. The county's neighbourhood engagement takes place through a system of area committees. While that could work well, the authority is not taking much notice of the area committees in some parts of the county, so even the existing mechanism is not being used.
	I realise that the Under-Secretary will not be able to say a lot in response to the debate because she is part of the consultation process. However, if the Government were to adopt the county's proposal for a single authority, would the county be treated as a continuing authority under the Local Government Act 1992? If it were, the existing county apparatus would essentially survive, and rather than having new authorities in which all positions would be up for open competition to allow people with the experience and qualifications to do the job to be selected, the county's staffing structure would be preserved to a large extent. I hope that the Minister will address that matter, even though I hope we will not face such a situation because I want the Government to go for the two-council option.
	The next criterion I want to consider is service delivery. Satisfaction levels and residents' experiences of the authorities demonstrate that the county council's services are, in a number of respects, worse than those of most of the district councils. There are a number of respects in which having an authority the size of the present county manifestly does not work. We have experienced particular problems with education and school transport. The county council has failed every attempt to win Government support for its projects under the building schools for the future programme. Every single bid that it has made has been turned down. It now looks as though it will be 2014 before we are even in with a chance. There must be something wrong, and I put that to the Minister for Schools, who came up to the region. Clearly, officers in the relevant Department do not regard the county's bids as satisfactory. There is a serious element of the Government not valuing the kind of proposals that the county makes. That may partly reflect the difficulties of running education services in such a diverse county.
	To take the case of school transport, the county failed to bid for funds that it would have received from the Learning and Skills Council, and so deprived itself of money that was available. Partly as a consequence, it is charging everyone over 16 who needs school transport £360 a year to get to school or college, and that is in an area where the take-up of post-16 education is low. It has denied college students from Berwick rail passes to get to college in Newcastle. Instead of a 45-minute train journey, they face a bus journey of an hour and a half, or an hour and three quarters, and many of them simply opt out, or pay to travel on the train. Those points illustrate the fact that the county is not able to administer some of its services satisfactorily in such a diverse area. That is one of the drivers behind people feeling that they would be better off with two authorities, rather than one.

Angela Smith: I congratulate the right hon. Member for Berwick-upon-Tweed (Mr. Beith) on securing the debate on what is obviously a key issue for the people of Northumberland. I appreciate the strong feelings that have been expressed. There are few occasions in the House when all three parties agree and it is a rare opportunity for a Minister to respond to such a debate. I am grateful to all four hon. Members who took part—my hon. Friends the Members for Wansbeck (Mr. Murphy), and for Blyth Valley (Mr. Campbell) and the hon. Member for Hexham (Mr. Atkinson), as well as the right hon. Member for Berwick-upon-Tweed—for their contributions.
	Let me first provide some context. As hon. Members know, we initially received 26 proposals from local authorities for the creation of unitary authorities, in response to the invitation that we issued alongside the local government White Paper in October last year. After careful consideration, it was announced that 16 proposals could be taken forward to be short listed and we could then proceed to a stakeholder consultation.
	The right hon. Member for Berwick-upon-Tweed said that he understood the constraints on what I can say today because we are in a legal process about consultations. Much as hon. Members might like me to go into detail about the merits or otherwise of the specific proposals or the authorities involved, I cannot. The reasons for our judgment were set out in the letter of decision that was sent to councils on 27 March. Many points that hon. Members made tonight are on the merits of the proposals.
	I should like to deal with the questions that have been asked in the debate and set out how we reached our current position and the way in which we proceed from here. We published our invitation in response to the views that had been expressed during a long-standing debate on the future of local government. However, as the hon. Member for Hexham said, it has not lasted as long as the debate on the future of Northern Ireland, which reached a successful conclusion this week. Existing arrangements in some two—tier areas do not deliver the governance that places need today. All hon. Members made that point, especially the right hon. Member for Berwick-upon-Tweed. He outlined the risks, challenges and difficulties in a two-tier structure. There can be confusion, duplication and inefficiency between the tiers.
	There is a view that moving to a unitary structure could improve accountability, create a stronger, more focused leadership in the local authority, improve the local authority's efficiency and especially improve the outcomes in service delivery for local people. My hon. Friends the Members for Wansbeck and for Blyth Valley stressed that point.
	Allowing restructuring was our response to that, and that view was held in several areas, as shown by the 26 proposals that were made to the Government. On 27 March, my hon. Friend the Minister for Local Government announced that 16 proposals were being taken to stakeholder consultation, including the two proposals from Northumberland. In making that decision, the Government had to have regard to all the relevant information—the submitted proposals, any supplementary material from the proposers and any other available relevant information.
	We have written to all the councils that submitted proposals, setting out the reasons and the basis on which the decisions were made. All 26 proposals were judged against the five criteria that the Government published earlier. Our judgment is that there is at least a reasonable likelihood that the 16 proposals, if implemented, would achieve the outcome specified by the criteria. I shall not comment on the specific proposals, as I have already said, but I would like to set out the criteria and say something about them, while also responding to some of the questions.
	First, we were clear that the proposals had to be affordable. The changed unitary structure had to represent value for money and had to be met from a council's existing resources. They also had to be supported by a broad cross-section of partners and stakeholders. Comments were made about the relative value and relative merits of the amount of support for each proposal, which will be taken into account in the consultation that proceeds. At this stage, all that was being requested was that there was support for the proposal from some stakeholders.
	The right hon. Member for Berwick-upon-Tweed asked about the previous referendum in November 2004. I have to say that that took place in a different context and a different backdrop in 2004, but that does not mean that it can be dismissed. It, alongside other information, can be taken into account and it has been submitted in evidence as part of the consideration. The weight that can be attached to referendums and other such polls—the metropolitan area of Blyth Valley has been mentioned—depends on the question asked and how far it can be judged to be impartial and not to lead people a certain way, on how easily it can be understood by voters and the ease with which they can make a judgment on the information, and on the efforts taken to provide a fair and balanced explanation of the complex issues involved. All those matters can be taken into account. Indeed, they have been and are being submitted as part of the consultation on the proposals.
	In addition to those two criteria of affordability and support, the proposals have to provide strong, effective and accountable strategic leadership; they have to offer genuine opportunities for neighbourhood flexibility and empowerment; and they have deliver value for money and equity on public services. After consideration, it was decided that 10 of the proposals should proceed to stakeholder consultation. Having regard to the relevant information, the judgment was that there was not a reasonable likelihood that, if implemented, the proposals would achieve all the outcomes specified in the five criteria.
	The hon. Member for Hexham and the right hon. Member for Berwick-upon-Tweed asked why certain bodies were consulted and others, particularly SPARSE—Sparsity Partnership for Authorities Delivering Rural Services—left off the list. The list of consultees is not a definitive list of the only bodies that can be consulted. The chairs of local strategic partnerships and many other bodies were also consulted. Every chief executive in all the local authorities that had put proposals forward was contacted and told that any other body or group could be consulted and information passed on to others if appropriate. We said that we would have regard to all the representations received from any quarter. No group of organisations was disbarred or prevented from responding to the consultation.

Angela Smith: I shall come back to the right hon. Gentleman if I am wrong, but my understanding is that the former is the case and that we have moved forward to stakeholder consultation, which will now inform the decision-making. I am receiving an enlightened nod, so I am right that it is the former. Decisions were taken and have since proceeded. Consultation is now under way and judgments will be made about which part of the proposals will go forward, if either go forward, on the basis of that consultation and subsequent evaluation and judgment. I hope that that satisfies the right hon. Gentleman on that matter. He also asked why we are still consulting on the county proposals, but perhaps the answer that I gave to the last question also addresses that issue for him. We are now making a judgment on the relative merits of proposals from the consultation.
	My hon. Friend the Member for Wansbeck mentioned the Electoral Commission's proposals from 2004. Again, those may be submitted and taken into account as part of the consultation. The consultation will last for 12 weeks, finishing on 22 June. As I have said, we welcome comments, information and views from key partners and stakeholders who have an interest in the areas affected by the two short listed proposals. As the invitation explains, partners and stakeholders include all local authorities, the wider public sector, the business community, and the voluntary and community sector. Anyone may respond. There are copies of the consultation document in the Library of the House and it can also be obtained from the Department and from the Department's website.
	After the stakeholder consultation, we will need to consider carefully all the representations that we have received. All the information provided to Ministers will be considered in the course of the examination of the issues. I want to give an assurance to the four MPs who are here in the Chamber that the views that they have expressed today will be taken into account, but they might wish to make formal submissions as well.
	The proposals will move to implementation if, and only if, when the final decisions are taken, we are satisfied that they meet the criteria and that they remain affordable. We will also need to be satisfied that they have taken into account all the possible risks involved in the implementation. Careful consideration will be given to the findings of the consultation.

Angela Smith: We are jumping ahead a little bit in presuming the outcome; decisions have not been taken. The right hon. Gentleman used the term, "continuing authority", which has sometimes been used in the past during reorganisations. Any unitary authority implemented as a result of the current process would be, as generally understood, a brand new authority; it would not be a continuing authority. The use of the term "continuing authority" was for a technical reason in relation to proceeding with a new organisation. No decisions have been taken on how a particular proposal would be implemented. A working group of stakeholders has been set up to examine all the implementation proposals. Within the limits of the legislation, we are prepared to be flexible on that. His point is noted, but no decision has been taken on implementation.
	I thank Members for their contributions and I assure them that their comments will be taken into account.
	 Question put and agreed to.
	 Adjourned accordingly at twenty minutes to Five o'clock.
	Correction
	 Official Report, 8 May 2007, column 128, Division No. 108, under Noes, delete "George, Andrew", insert "George, rh Mr. Bruce".